Patents for business processes are one area where I believe caution is warranted. In software, there's not really any need for them, and they can allow freeloaders to improperly profit from the work of software developers, just as open source does. This caution does not apply to patents in other technologies.
For software, properly enforced copyright combined with protection of source code suffices to prevent theft and enable healthy competition. Note that open source does not have this simple protection available to it.
The respectable literature on patents reaches no definite conclusions as to whether software patents are good or bad. An illustrative example of the debate can be seen in dialogue surrounding the paper by James Bessen and Robert Hunt (2004a), An Empirical Look at Software Patents. Robert Hahn and Scott Wallsend (2003) responded that Bessen's identification of software patents was flawed, thus undermining his claims that such patents retard innovation. Bessen and Hunt (2004b) defended the selection but concurred with some criticisms.
Another significant paper that casts doubt on the value of patents in fostering innovation is a study of the semiconductor industry from 1979 to 1995, by Bronwyn Hall and Rosemarie Ziedonis (2001: 125). They report that:
...firms amass vast patent portfolios simply as ''bargaining chips,'' leading to ''patent portfolio races.'' ... If patent rights were strictly awarded to inventors of -nonobvious,'' ''useful,'' and ''novel'' inventions, then it should become increasingly difficult to obtain a patent when a thicket of prior art exists, and the number of successful patent applications should fall. This is not, however, what we observe in this industry.
Nevertheless, several studies also report that patents have significant benefits for small firms and new entrants, directly contradicting the claims of patent opponents. This has particular relevance for Australia. For example, Ronald Mann (2004: iii) of the University of Texas explicitly describes the alleged patent thicket as a myth. He writes:
This part explores several benefits, including the classic benefit of excluding competitors. In this industry at least, that benefit accrues primarily to small firms, protecting them from the competitive depredations of incumbents. Incumbents, by contrast, rarely use patents to exclude smaller firms from the industry. The part also discusses a series of less conventional benefits small firms gain from software patents: as barter in cross-licensing arrangements, in signaling their technical competence to third parties, in converting tacit knowledge into a verifiable and transferable form, and in making the firm attractive to potential acquirers.
Hall and Ziedonis (2001) make the same point:
... stronger patent rights may have facilitated entry by specialized firms and contributed to vertical disintegration in this industry.
The OECD (2004: 6) points out that only about 10 percent of software patents are granted to software companies, with the rest being to other types of business. Thus any special treatment of software patents could harm much broader sections of business. Mann (2004) makes this point too, writing:
Because there is considerable ambiguity about exactly what a software patent is - they do not fall into any specific PTO class - and because many patents in the classes that indisputably do constitute software patents are held outside the industry, that work says little or nothing about the software industry itself. As I suggested above, software is unusual among patentable goods in its interaction with all sectors of the economy. Thus, there are some software features in a wide variety of otherwise unrelated products.
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"Open Source is bad for Australia" is such a blanket statement that I would have to disagree.
The author makes valid points about GPL on occasions hindering, rather than enhancing business, but GPL is not the only Open Source model. GPL is often used with the attitude "I am not making any money out of publishing this code, so why should anyone else." Unfortunately, R&D investment can not be warranted "commercially" on a GPL system, because the entity spending the money does not get any benefit (except knowing they might make the world a better place).
There are also instances where Open Source would be detrimental to commercial interests in Australia. But Open Source often brings benefits, which is why I disagree. One of the problems with proprietary source code is that if the particular vendor goes bankrupt, or a relationship sours with a vendor, your data is effectively held hostage (Most of the time, you can not simply port to another vendor's package). Whilst open source doesn't guarentee flexibility (there may be binding contracts even in open source), in my view you are certainly more secure.
Secondly, many open source products are free. This is not co-incidental, but a consequence of GPL and alike. In fact, this is one of the factors hinted at in the article. I would like to suggest that Open Source classes, databases, languages, APIs and alike can significantly reduce development time. Most open source products have public documentation, so they don't need to be re-documented. Furthermore, not having to pay license fees can assist a software company to be more profitable.
Thirdly, on following on from point two, cheaper development costs inevitably lead to more competitive markets and cheaper prices to the end user. This makes software more accessable to Australians.